Summary
Backblaze closed its first year as a public company with fourth-quarter revenue of $18.7 million, up 28.2% from the prior-year quarter. Full-year revenue was $67.5 million, up 25.5% from the prior year. The mix kept shifting toward B2 Cloud Storage, which grew 56% in the quarter and 59% for the year, while Computer Backup grew 16% and 13%. Gross profit was $9.83 million in the quarter, up 30.0%, and $34.3 million for the full year, up 22.7%. Gross margin was 52.6% in the quarter, up 0.8 percentage points from 51.8%. For the full year, gross margin slipped to 50.9%, down 1.1 percentage points from 52.0%.
The bottom line deteriorated. The quarterly operating loss widened to $7.58 million, and the operating margin was negative 40.5%, down 23.5 percentage points from negative 17.0%. The company reported a net loss of $9.6 million for the quarter, wider than the prior-year quarter. For the full year, the operating loss widened to $18.79 million and the operating margin was negative 27.9%, down 20.9 percentage points from negative 6.9%. Net loss for the full year widened to $21.7 million. Diluted net loss per share was $1.07 for the full year, compared with $0.36 in the prior year.
Operational metrics showed continued customer expansion but some moderation in retention. Annual recurring revenue was $75.4 million, up 27% year over year. B2 Cloud Storage ARR was $26.8 million, up 57%, and Computer Backup ARR was $48.6 million, up 15%. Net revenue retention was 110% compared with 114%. B2 Cloud Storage NRR was 130% versus 136%, and Computer Backup NRR was 102% versus 107%. Gross customer retention was 91% compared with 90%; B2 Cloud Storage was 89% in both periods, while Computer Backup was 91% versus 90%. The company ended the year with 498,933 customers, up from 466,298. B2 Cloud Storage customers totaled 74,318, up from 59,112, and Computer Backup customers totaled 439,249, up from 419,209.
Cash generation turned negative in the quarter. Operating cash flow was negative $2.44 million, down from positive $3.25 million in the prior-year quarter. For the full year, operating cash flow was $3.52 million, down 72.5% from $12.82 million. Capital expenditures were $0.69 million in the quarter, up 96.6%, and $7.58 million for the full year, up 256.7%. Deferred revenue stood at $24.9 million at quarter end, up 28.4% from a year earlier. Adjusted EBITDA was negative $1.3 million in the fourth quarter, or negative 7% of revenue, compared with $2.0 million and 14% of revenue a year earlier. For the full year, adjusted EBITDA was $3.2 million, or 5% of revenue, compared with $11.1 million and 21% of revenue. Adjusted gross profit was $14.1 million, or 75% of revenue, in the quarter, and $50.5 million, or 75% of revenue, for the full year. Backblaze guided to first-quarter 2022 revenue of $19.0 million to $19.5 million, an adjusted EBITDA margin between negative 20% and negative 16%, and 30.5 million to 31.0 million basic shares outstanding. For the full year 2022, the company expects revenue between $83 million and $86 million and an adjusted EBITDA margin between negative 18% and negative 14%. Management said it intends to scale sales and marketing investments significantly more than previously planned to pursue its market opportunity. Risks cited include market competition, the impact of COVID-19 and its variants, supply chain disruption, cyberattacks, the ability to attract and retain customers, and material weaknesses in internal controls over financial reporting.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2021 | Q3 FY2021 | QoQ | Q4 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $18.7M | $17.3M | +8.0% | — | — |
| Gross profit | $9.8M | $8.8M | +11.7% | — | — |
| Gross margin | 52.6% | 50.8% | +1.8 pp | — | — |
| Research & development | $6.2M | $5.3M | +16.6% | — | — |
| Sales & marketing | $6.5M | $5.0M | +30.3% | — | — |
| General & administrative | $4.6M | $3.1M | +49.5% | — | — |
| Total operating expenses | $17.4M | $13.5M | +29.3% | — | — |
| Operating income (loss) | -$7.6M | -$4.7M | -62.4% | — | — |
| Operating margin | -40.5% | -26.9% | -13.6 pp | — | — |
| Net income (loss) | -$9.6M | -$6.0M | -60.3% | — | — |
| Net margin | -51.4% | -34.6% | -16.8 pp | — | — |
| Diluted EPS | -$0.47 | -$0.32 | -$0.15 | — | — |
| Customers | 500,000 | — | — | — | — |
| Net retention rate | 110.0% | — | — | — | — |
Risks
Company has a history of cumulative losses, with net loss widening to $21.7 million for the year ended December 31, 2021 from $6.6 million for the prior year and an accumulated deficit of $36.3 million as of December 31, 2021. It expects to continue investing in sales, marketing, and infrastructure and does not expect to be profitable for the foreseeable future.
Markets are intensely competitive with larger competitors including Amazon Web Services, Google Cloud Platform, Microsoft Azure, EMC/Dell, and NetApp that have greater resources and brand recognition. Competitors could offer lower-priced or bundled services, resulting in pricing pressure, reduced sales, and lower margins.
Company identified material weaknesses in internal controls over financial reporting. As a newly public company, it must comply with Section 404(a) of the Sarbanes-Oxley Act, and failure to maintain effective controls could harm investor confidence and the stock price.
In December 2021, an industry-wide zero-day vulnerability in the Apache Log4j library led the company to take its systems offline briefly to apply a security patch. In late March 2021, a marketing campaign misconfiguration may have inadvertently shared certain file metadata with Facebook for less than 2% of customers, and no customer files or account information were shared.
Company plans additional sales and marketing investments to scale the business, and sales and marketing expense increased 65% for the year ended December 31, 2021 while general and administrative expense increased 92%. These increases contributed to the operating loss widening year to date.
Reliance on third-party data center and hard drive providers with limited sources of supply exposes the business to potential supply and service disruptions. Starting in April 2020, the company acquired additional hard drives through capital leases to mitigate COVID-19 supply chain disruptions, increasing its capital equipment balance and related lease liability.
Headcount grew from 82 employees as of December 31, 2018 to 270 employees as of December 31, 2021, and storage deployed more than doubled in the last two years. Rapid growth strains management, corporate culture, and administrative, operational, and financial infrastructure.
Total company net revenue retention rate declined to 110% at December 31, 2021 from 114% at December 31, 2020, and B2 Cloud Storage NRR fell to 130% from 136%. A decline in expansion from existing customers could adversely affect revenue growth.
Substantially all revenue comes from a small number of offerings, B2 Cloud Storage and Computer Backup, with limited corresponding use cases. Any general or industry decline in demand for cloud-based storage solutions could reduce revenue without meaningful offset from other market sectors.
Business is substantially dependent on mid-market organizations (10 to 999 employees), which may be more vulnerable to market fluctuations, have limited budgets, and be more difficult and expensive to acquire and retain. If unable to sell to mid-market organizations successfully, revenue growth and profitability would be harmed.
Approximately 28% of 2021 revenue came from customers outside the United States. The Russia-Ukraine conflict led to sanctions and the company waived charges for customers based in Ukraine until June 1, 2022, and the conflict could increase energy costs and disrupt supply chains.
Dual class structure gives holders of Class B common stock approximately 96% of the voting power at the completion of the IPO, concentrating control with founders, executives, and directors. This may limit investor ability to influence important transactions and could affect index inclusion.
Capital lease liability increased significantly to $33.2 million as of December 31, 2021, and interest expense rose 27% for the year ended December 31, 2021. Future minimum payments were $38.2 million under capital leases and $21.0 million under operating leases as of December 31, 2021.
SaaS KPIs
All quarters →Adjusted Gross Margin
B2 Cloud Storage Gross Customer Retention Rate
Computer Backup Gross Customer Retention Rate
Gross Customer Retention Rate
Adjusted EBITDA
Annual Recurring Revenue (ARR)
Net Revenue Retention (NRR)
B2 Cloud Storage Net Revenue Retention (NRR)
Computer Backup Net Revenue Retention (NRR)
Adjusted Gross Profit
B2 Cloud Storage Annual Recurring Revenue (ARR)
Computer Backup Annual Recurring Revenue (ARR)
B2 Cloud Storage Number of Customers
Computer Backup Number of Customers
Number of Customers
Summary, forecast, risks and KPIs are extracted from Backblaze, Inc.'s SEC filings for Q4 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.